Businessman John Privett thought he had a solution to the problems of some of Houston's troubled schools. The parents wanted to try it. The teachers wanted to try it. But HISD administrators said no.

When Houston businessman John Privett talks about fixing the schools, he still burns with anger at the way Houston's education leaders treated him. In the spring of 1993, Privett thought he had something magical going. The teachers of three elementary schools and one middle school had voted overwhelmingly to get their instruction program from his private company as opposed to that of the Houston Independent School District.

Privett had warned the schools' teachers that his curriculum was going to be tough; it was the same one Wesley Elementary School Principal Thaddeus Lott had used to significantly raise the reading and math scores of his poor African-American students. When he met with the faculty of Kelso Elementary, a predominantly black elementary school in southeast Houston, he told the teachers they would have to work much harder to master the company's daily lesson scripts. "That's the way it has to be!" Privett recalls the teachers responding. When he told them that every minute of the 110 to 150 or so daily minutes of instruction time would be directed by an on-campus company trainer, one teacher, Privett says, responded, "It's the teacher's job to follow the trainer." When he warned them that the program was so difficult that some teachers might abandon education forever, Privett was encouraged to hear several teachers yell back, "Then they shouldn't be teachers."

At Kelso, teachers voted 34 to 1 in favor of adopting the curriculum and training of Privett's Performing Schools Corporation. At largely Hispanic Wilson Elementary in Mon-trose, the vote was 28 to 1 in favor of Performing Schools. To show that the program had more than just the teachers' backing, Wilson's Parent-Teacher Organization solicited 70 letters of support from its approximately 200 sets of parents and sent them to district headquarters.

At predominantly black Foster Elementary, the principal was a former high school teacher who had seen firsthand that nearly all school failure in later years is caused by the failure of elementary schools to teach children basic skills. Foster's Shared Decision-Making Committee of teachers and parent representatives voted unanimously to adopt Privett's curriculum. So did the committee at E.O. Smith Middle School, one of HISD's most troubled schools and a longtime dumping ground for bad teachers and student troublemakers. Privett hadn't wanted to take on a middle school at first, but when his experts tested E.O. Smith's children and found that 70 percent of them couldn't read, he decided he couldn't refuse them.

Privett had expected some principals to be receptive to his proposal, but he wasn't prepared for such a positive response from teachers, who are often blamed for the sorry state of public education. All over the nation, teachers concerned about issues of accountability and academic independence had been resisting efforts to privatize the public schools. Yet surprisingly, Performing Schools was endorsed by the local chapter of the American Federation of Teachers, whose membership includes about half of HISD's 10,000 teachers.

Privett won that endorsement, says the union's president, Gayle Fallon, by consulting with the union about certain sensitive issues. Both the union and Privett agreed that teachers had to want the curriculum for it to succeed. They also agreed that school principals, not the private company's trainers, would conduct all teacher evaluations. Privett says he didn't want to manage the teachers anyway; he wanted to manage the principals. And although Performing Schools offered carefully scripted lessons, it also, Fallon points out, gave teachers a great deal of discretion about how to use the rest of their time, and a good deal of independence and responsibility in making the system work.

But the most important reason teachers were interested, says Fallon, was Performing Schools' trainers themselves. Though HISD provides teacher training, Fallon says her membership constantly complains about its quality. "If you get a new program," she says, "they'll crowd everyone into a big room and do a ses-sion on how to use the thing. But the follow-up is minimal."

Privett, in contrast, was offering immediate, on-site assistance with instructional problems, a kind of support, says Fallon, that HISD teachers don't usually get. Also, since Privett's plan called for teachers to ultimately become trainers, he offered them the promise of managing themselves.

Privett's plan was popular in part because it reflected a national trend to take power away from federal, state and district bureaucracies and give it back to teachers and parents. And since 1990, HISD had been talking about innovation, decentralization and "site-based" management. Privett arrived with a plan based on a curriculum that had proven results with inner-city children. Some principals wanted it even at the expense of cutting personnel, and many teachers wanted it even though they would have to give up a measure of autonomy. The parent representatives wanted it. Even the Greater Houston Partnership's chamber of commerce, looking for innovation in the schools, supported Privett's plan.

All of the pieces seemed to be in place. And then, as Privett watched, it fell apart. Then-HISD superintendent Frank Petruzielo refused to approve the cuts in staff positions needed to fund the program at E.O. Smith, and the middle school had to be dropped from the proposal.

Then the school board wilted. Citing financial difficulties, Petruzielo never put Performing Schools on the board's agenda. Trustee Arthur Gaines, in whose district two of the four schools slated for Privett's program were situated, was outspoken in his opposition. Even Wesley Elementary Principal Thaddeus Lott, who had made a name for himself by using the same curriculum that Privett offered to provide and had fought the central administration in order to use that curriculum, shared Gaines' sentiment. "Why," Lott asked, "should we pay this man a million dollars to do something we should be doing already?"

Money, and the issue of private profit from public students, is often a sticking point when the specter of school privatization is raised. And Privett's plan did have its costs: about $300 per child per year to provide materials and fund the trainers during the start-up, an expense predicted to decline to $150 per child per year once the program was running. To get his plan up and going in two elementary schools, Privett was asking for roughly $1 million over three years. Not exactly chicken feed, but at the same time, not a large percentage of HISD's annual $850 million operating budget. Thumbing through an inch-thick copy of the district's budget, teachers union leader Fallon says, "They could have funded it out of 'miscellaneous.'"

Privett might well have agreed that had HISD been doing what it was supposed to be doing, then his proposal -- as Lott said -- would have been unnecessary. The point was, that even with the exam-ple of Lott's success, HISD had been slow to make use of the curriculum Privett was offering.

No, the real problem, Privett felt, was not money. It was that he was trying to participate in determining curriculum, an area that professional educational administrators have determined is theirs, and theirs alone. Perhaps concerned that if they opened the curriculum issue up to the public they would be invaded by hordes of people brandishing agendas for what should and should not be taught in the schools, educational professionals have tended to be protective about letting others into their curriculum game.

But as Privett notes, he wasn't concerned with what was being taught so much as how; and as he also notes, he was offering nothing that a few of HISD's own visionaries hadn't already tried. He was just offering to take their ideas and do what they had been unable to do: push aside the bureaucracy and make the curriculum widely available.

Today, John Privett has a fantasy. He would like to run a secret ballot in every elementary school in Houston. Just give every teaching staff, every principal and every PTO a choice between HISD's offerings and his program, and see who would win. And if the Texas Legislature passes significant charter school reform this session, Privett's fantasy could come true.

John Privett's interest in changing the schools has a personal component. Growing up in California, he received poor training in reading, and as a result struggled all through school. It wasn't until he was in the Air Force that he managed to overcome his reading problem, and once he left the military he went on to earn an MBA at the University of Texas.

Following graduate school, Privett spent three years at Ford Motor Company in Michigan, where he supervised a team in charge of new-car cost control. Though he enjoyed working for Ford, he left when he noticed the company wasn't only losing market share to the Japanese, it was losing interest in dealing with the problem. "I didn't," he says, "want to be part of a company that had lost its zest of giving the consumer the best possible product." It was a perspective that he would later bring to the schools.

He returned to Texas to work for Bob Bullock, then Texas comptroller. For Bullock he managed a system for evaluating the fiscal impact of local bills, and worked on the historic revamp of the Texas Property Tax Code.

From Austin he moved to Houston and, from 1979 to 1992, served as president of the corporate-sponsored Tax Research Association. As a tax watchdog he pried into local tax expenditures, always focusing on the numbers and how public money can be spent most effectively. In the early 1980s, he challenged Metro's cooked numbers on its proposed heavy rail system, an investigation that contributed to its massive defeat at the polls. Last spring, Mayor Bob Lanier hired him as a consultant to study the cost-effectiveness of a downtown sports stadium. Not a good idea, Privett concluded. He has just finished a study for the city about the effectiveness of its tax abatement policy in attracting new industry.

Since education accounts for approximately half of all local tax expenditures, Privett spent about half his time at the TRA on education. In 1990, he analyzed a huge HISD tax increase and essentially wrote the school board a fresh budget. He showed the board and then-superintendent Joan Raymond how they could reduce the increase by $17 million, cut administrative costs and still provide teachers the largest salary increase in HISD history. The board adopted his plan by a 9-0 vote.

From 1989 to 1991, Privett served on the Texas School Performance Indicators Committee, which was created by the state Legislature to create a performance-driven description of how effectively the state's tax money was being spent. Privett worked with a panel of school superintendents to write a "report card" on the performance of every school district and campus in the state. After months of battles on how to create a fair system of accountability, the committee created the Academic Excellence Indicator System. This computer database provides the public with a description of how schools and school districts perform on state achievement tests, and provides school-to-school comparison of performance, expenditures and demographics.

In 1990, while Privett was working on the committee, he asked his associate, George Scott, to find some effective schools that they could visit. Scott must have started at the end of the alphabet, Privett recalls, because he quickly came up with Wesley Elementary in the black community of Acres Homes. Wesley had all of the problems an inner-city school could have -- poverty, children being raised by grandparents and single mothers, drugs. Yet under the direction of a tough, demanding, homegrown principal named Thaddeus Lott, the school's kindergartners did math, not just arithmetic. Lott's first-graders read at second- and third-grade levels, and their achievement scores equaled those of upper-middle-class schools.

Privett found that Lott was getting these results with an off-the-shelf curriculum called DISTAR (Direct Instruction Strategy Teaching Arithmetic and Reading) that had been developed in the late 1960s by a University of Oregon education professor named Siegfried Engelmann. DISTAR offers a complete program in mathematics, reasoning and phonics-based reading for grades K-3, as well as a system of classroom management. Lott had to scrounge to buy the texts and workbooks for the curriculum, and his teachers had to endure snide remarks from HISD curriculum leaders who regarded the curriculum as old-fashioned.

In 1991, Wesley's high scores on the statewide achievement tests prompted accusations by HISD administrators that Lott's teachers must have been cheating. Lott was vindicated when ABC's Prime Time exposed the mean-spirited nature of the accusation and embarrassed then-HISD superintendent Joan Raymond on national TV.

At the heart of the accusation was a curriculum battle that still divides American education: the battle between teaching the "whole language" method of reading and teaching phonics.

DISTAR teaches phonics and other basic skills through carefully scripted lesson plans that teachers must perform almost the way an actor learns a script. This requirement comes, DISTAR proponents say, not out of a desire to control teachers, but out of the discovery from years of fieldwork that the biggest problem young children have in learning is ambiguous instruction from their instructor. The scripts are designed to eliminate this ambiguity. Students are required to recite answers in unison with the teacher to monitor their understanding. Recitations are seen as a way to provide instant feedback to a teacher, who can then tell at a glance whether a child is merely mouthing an answer or lagging behind in response. Homework is graded daily (something that doesn't always happen in other programs) and students are evaluated on a weekly basis.

With its emphasis on teaching basic skills, DISTAR was competing with curriculum trends that emphasized less easily measured objectives. The competing models were labeled "cognitive-conceptual" and "affective cognitive." Some of these models stressed developing objectives based on the individual needs of each child; others emphasized the development of positive attitudes toward school, and letting children self-schedule their own activities. Yet other programs were designed to reach subjective goals such as positive self-image, creativity, self-respect, openness to change and imagination. In the late 1970s, a federally funded study called Operation Follow Through found that students who were taught with direct instruction tested better than students taught by the other models. As a result, DISTAR enjoyed a brief spate of popularity. But it was soon overwhelmed by the latest curriculum trends.

One of those was "whole language," a theory that says children learn to recognize words on sight, and that they become good readers by plunging into reading, skipping over words and mastering them by context and repetition rather than sounding them out and looking them up. Under Joan Raymond's administration, whole language became the preferred method for teaching reading in HISD.

Whole language seems to work best with children who already have a firm foundation in language and reading at home. A middle-class child might come to school with several thousand words of vocabulary, while children from less advantageous backgrounds might come to school with a vocabulary of only a few hundred words. Still others will have a few hundred words in Spanish and a few hundred in English. Fallon says many of her teachers believe that phonics, and the use of direct instruction techniques such as those found in DISTAR, should provide the foundation for learning to read, and that it can then be followed with whole language instruction. The intelligent approach, she says, is balance.

"I was a cryptographer before I got into all this," she says, "and you've got to break the code before you can get the message. Direct instruction teaches children to break the code. It baffles me how anyone can expect a child to learn to read by memorizing an entire sight vocabulary. Yet we have people in the curriculum department who will tell you how evil direct instruction is rather than figure out how it's an essential component in any reading program."

Rose Hicks, HISD's deputy superintendent for educational programs, believes that most of HISD's elementary schools do strike a balance between phonics and whole language. She also says that since she took over the curriculum department in 1991, whole language hasn't been pushed as strongly, and principals and teachers who want to use direct instruction and phonics aren't criticized or pressured to change. But she also said she really didn't know how many schools were using phonetics-based programs for teaching reading.

Besides, Hicks says, other schools have had impressive results with the same kinds of children that Lott teaches without depending on a phonetics-based program such as DISTAR. As an example, she points to Bessie Hickman at J. Will Jones Elementary, which uses a teaching strategy called Accelerated Learning. In that program, Hickman says, teachers are "empowered to be creative and use different teaching styles to meet each child's learning needs rather than the 'drill and kill'" of direct instruction.

The key to success, Hicks says, is for teachers and principals to carefully match curriculum to the needs of their children. A former teacher and principal, she said she has had to adapt different strategies for children who live only two miles apart. That's why site-based management is so important. Every school makes its own choices. But no question, Hicks says, "Thaddeus is a pacesetter."

Privett was impressed with Lott's achievements all right. But being interested in systems, he saw that Lott's students weren't learning just because Lott was a great leader. It was the curriculum that was working. Privett determined that he would try to see that curriculum made easily available in other HISD schools. When Frank Petruzielo succeeded Joan Raymond as superintendent in the summer of 1992, Privett showed up in his office within two weeks, offering a deal Petruzielo couldn't refuse. Privett had talked with seven school principals who were tired of failing with the whole language approach; they wanted to try Lott's methods. Would Petruzielo help them with a special grant of $70,000 for materials and training? Petruzielo, who had to remember Joan Raymond's embarrassing performance on Prime Time, agreed.

The grant helped, and within a year reading scores had risen dramatically. But, Privett says, he and the principals were naive about how much it would cost to actually put DISTAR in place. Houston schools were just getting part of the program. For the complete system a full-time on-campus trainer was needed -- and that would require more money.

By 1992, Privett had been leading the Tax Research Association for 13 years and he was ready for a change. His wife had completed graduate school and his stepson was out of college. He resigned his $70,000-a-year post and ran as a Republican for Harris County Tax Assessor against one of the oldest incumbents in local politics, Carl Smith. He thought that Smith, then in his early 80s, was likely to step down, but he didn't. Privett says he enjoyed the campaign in which he promised to modernize the office, but didn't have a chance against Smith's name recognition.

With the November campaign over, Privett learned that HISD was soliciting proposals to improve the schools. He started phoning and faxing Siegfried Engelmann, DISTAR's creator, and the program's chief trainer, Jerry Silbert. By now Privett knew much more about the system. He told Silbert and Engelmann to ignore the costs for the time being and help him design a system that was guaranteed to turn a school around.

Privett says he didn't begin with the notion of creating a private business, but he knew he would have to get a contract that would enable him to circumvent the HISD bureaucracy. The reasons, he says, are practical. In January a principal begins drawing up a budget for the following academic year and passes it on to the next division. For months the budget trickles up through the system to the districtwide budget in July. By August, the school board approves the budget, and the school doesn't get its materials until December, all of which makes innovation a slow affair.

A business, on the other hand, could move more swiftly, something essential with a program such as DISTAR, where students may move through more than one grade level in an academic year and have to have follow-up materials immediately available. He could have organized his company as a nonprofit, Privett admits, but nonprofits, he says, don't tend to grow. If his project worked, he wanted to make it available to lots of schools as quickly as possible, and only a profit-making entity, he decided, would attract the investment that could make this happen.

He spent four intense months figuring out his concept -- which included the notion of financial penalties if his business, which he named Performing Schools, failed to achieve specific test-score gains. Then Privett had to see if he would have any takers. On March 3, 1993, he and Jerry Silbert conducted a districtwide briefing for principals and staff. It was held with only one-day's notice from the school district, but 54 staff members representing 14 schools turned out regardless.

Among them was Ramon Alvarez of Wilson Elementary in Montrose. An ex-Marine who came from a large family in South Texas, Alvarez had spent his entire career as a teacher and administrator at the high school level. He had no preconceptions about the best way of teaching reading. But soon after he took over as principal in January 1990, he realized that whole language wasn't working.

"What we were doing was memorizing," he recalls. "I asked a little boy, 'Can you read?' and he said, 'I can, Mr. Alvarez, I can read.' I noticed that he was not really reading. He was looking at the pictures and coming up with the words he had memorized. So I asked him if he could read some with his eyes closed. And he said, 'I can.' And he started reading me the story although he was not looking at the text."

Like Privett, Alvarez was drawn to DISTAR's phonics-based method of teaching reading. Alvarez visited Thaddeus Lott's school and then flew to Oregon at his own expense to be trained in the curriculum. Because his school couldn't afford a trainer, he tried becoming the trainer himself, a solution that proved unworkable. He also tried to force the curriculum on his staff, creating some resistance that was only untangled through the help of Privett, Fallon and the teachers union.

While Alvarez has made impressive progress -- some of his kindergartners are finishing the first and second grade, while some second-graders are reading fourth-grade materials -- he's had to scrounge to pay for his consultants, asking for donations from local businesses. Jerry Silbert, Privett's partner in Performing Schools, has donated part of his time to Alvarez's school because, he says, he's passionate about the bilingual aspect of the program. If Alvarez had aggressive support from his district, Silbert says, there's no telling what the school could accomplish.

Silbert, who has projects going in tough inner-city schools in Chicago and rural schools in Utah, is saddened by what he sees as the denial of his and Privett's curriculum.

"St. Petersburg, [Florida] recently cleaned out a whole school and put in whole language," Silbert says, "but with direct instruction they will barely let us come into two classrooms. We should be invited in."

Though Privett was pushing DISTAR, he says he would like to see education, a $100-billion-a-year national industry, opened to many approaches other than his own. Giving the opportunity, he says, businesses would be more than willing to supply the curricula and training to receptive districts. But as long as the curriculum is kept in the hands of the educational bureaucracy, he says, little is likely to change. It's too slow in recognizing problems, and even slower when it comes to addressing them.

Privett says he worked with HISD for months to figure out accountability models. It was, he recalls, a frustrating process. For instance, he says, HISD didn't, and still doesn't, have a baseline accountability process, because it doesn't test students until the third grade. So how could he tell whether his first-graders were doing better than the system's other first-graders?

The failure of the schools to institute a thorough and comprehensive evaluation system, says Privett, is the most profound symptom of educators' failure to understand the simplest of management procedures: quality control. While business has been rapidly adjusting to a competitive climate where products and failed services are systematically scrutinized for failure, educators have not.

"The people who understand the problems of education are not educators," Privett says. "If you want a person who will understand education," he says, "don't take a lawyer or a writer or an economist and go to a school. And certainly don't take an educator. They don't have the background. Take an engineer. I've never taken a good engineer into a school who didn't immediately see what the problem is. There's no system. It's unmanaged. Management does not mean beating people up. Management means equipping them with skills and resources so they can do their job. I know that sounds very academic, but it happens to be true. It is an unmanaged system."

So what Performing Schools was offering was a management system. It was not going to manage the janitors, or the cafeteria; it wasn't going to install computers or video technology. It was going to offer a principal the resources with which to manage a school, resources that Privett and his supporters insist HISD either couldn't, or wouldn't, provide. And without those resources, without that willingness to take initiative, Privett insists, HISD is going to just keep muddling along, whatever its rhetoric.

HISD Superintendent Rod Paige seems almost indignant when he is asked why the district turned Privett's proposal down. To emphasize his point, Paige raises to his full height, well over six feet, and walks restlessly around his office. Why, Paige wants to know, is he being asked about a plan that was rejected a year and a half ago as risky and expensive, when there are so many other positive stories in HISD? He tells about a middle school teacher who helped turn a gang member around by getting him to clean up his image, down to wearing a necktie to school. He points out that Houston schools are decentralizing and emphasizing site-based management. Principals and teachers are being given a blank sheet of paper and are being encouraged to reinvent education. And if a school goes bad, he says, the central administration stands ready to clean it out and restaff it. Besides, he says, schools that want to are already using the curriculum that Privett proposed to provide. Not only that, but what does Privett know about education? He has never been a teacher or an administrator.

It's difficult to ask a question because Paige lectures almost nonstop for an hour about how HISD welcomes innovation, and about how poor Privett's proposal was. Occasionally he turns to his chief of staff, Susan Sclafani, to underscore or amplify a point.

Sclafani, a quiet, dark-haired woman with a doctorate in education, has served HISD for many years in top administrative positions. Widely regarded as the real power in HISD administration, Sclafani spent months negotiating a contract with Privett. She also wrote him the letter of rejection that was signed by Petruzielo. Sclafani wrote Privett that he had a nice proposal, but the board needs to go slowly, especially when it comes to spending public money. Maybe, she suggested, he would apply again next year?

It sounded kind enough on the surface, but Privett had had enough. Besides, how could he come back again next year when the superintendent he had originally dealt with, Petruzielo, was gone, and his replacement, Rod Paige, hadn't returned any of Privett's phone calls?

So for the moment Privett bides his time, doing a few consulting projects. He's also watching how the Texas Legislature handles charter school legislation. The report on charter schools prepared by the legislative budget committee singled out the Performing Schools contract as a good example of why more legislation needs to be written. Everything was legally in place for HISD to sign the contract with a private vendor, the report states, but one thing was missing: a route for appeal. If HISD wouldn't go along, the process was over, regardless of what the parents or teachers might have wanted.

"If the day comes when the Texas Legislature puts the power in the hands of the parents and teachers," Privett says, "we'll be back with a whole lot of people to fix schools. What we proved is that the teachers will vote to line up with people to turn the campuses around. We'll be back.